Swazi Observer

FULL STORY

THE SECRET OF THE ELEPHANT

By Nokwanda Dlamini | 2022-09-25

You know the saying: “the elephant never forgets?”

Its knowledge, aided by its memory, is its power. Knowledge is also power for financial planning. If you do not draw up a budget at least once a year, you won’t know if you have, or could get any spare cash to increase your savings, or reduce your debt. Only a budget can give you that powerful knowledge.

The elephant shows you how to:

n Learn what you earn, know what you owe and comprehend what you spend.

n Use this information wisely to plan you spending in the future so that you can reduce debt, save more, or both.

n Get into the habit of doing an annual budgeting exercise on the same day each year.

To help you get into the habit, you can follow these few steps to create a really useful personal budget.

Learn what you earn: understand your salary slips and bank statements so you know exactly what is coming in

Know what you owe: record your expenses carefully so you know exactly what is going out

Draw your future budget: set new targets and limits for certain items

Review your budget: at the end of each month, compare your budgeted expenses to your actual expenses.

Are your monthly expenses more than what you earn? Do you know exactly what you earn, or where your hard-earned money is going each month? A great secret of wealthy people is that they take control of their earning and expenses.

The secret of the elephant says that knowledge is power. Know and remember the details of your earnings and spending. Use this information wisely to plan your spending. Learn what you earn, know what you owe and understand what you spend.

Unlike with the elephant, human memory is unreliable. Luckily, we have the ability to read and write to help us remember. So, with proper record-keeping we can remember as well as the elephant. Collect the details of your income and spending and write them down. Proper record keeping will help you understand your spending habits so much better. It might surprise you to see how much you actually spend on items such as transport, lunches, cell-phones, relaxation, account payments, etc. Once you have recorded what you actually earn and spend your money on, you plan how to change your spending to suit your income and future goals. This knowledge gives you the power to change. Budgeting is a skill that everyone can learn and it is a very important life skill. All you need to budget successfully is a commitment to getting control over your finances, a calculator, some paper and a pen.

A budget will help you:

n Know how you are actually spending your money

n Decide on your priorities and what needs to be changed Plan how to use your money in the future and; Take control of your finances

n Follow the steps below as you journey towards successful budgeting.

Step 1: Learn what you earn

View your salary slip and bank statements.

How much money is coming in each month?

What deductions are taken from your salary?

Step 2: Know what you owe – record your expenses

Write down all your expenses

What do you spend your money on now?

What money do you owe?

Are there other expenses due in the next six months?

Step 3: Reflect on and change your expenses

Work out your income less your expenses

Are you living beyond your means?

What can you sacrifice or change?

Are you saving enough?

Step 4: Draw up your budget

Design a workable budget for your household.

What is your household’s disposable income?

Plan your fixed, variable and irregular expenses.

What can you adjust so that you live within your means?

Step 5: Review your budget

At the end of each month, compare your budgeted expenses to your actual expenses

n Are you sticking to your budget?

n Is your budget realistic?

n What changes does your budget need?

To budget effectively, you need to be clear on the differences between your gross income, your net income and your household income.

The final step of reviewing your budget is arguably the most important. Review where you are after a month, 3 months, 6 months and a year. If your circumstances change, revise your budget. Check if you are sticking to your budget. Does your budget support your long-term vision to create wealth? If not, what can you change? To be wealthy, you have to have a workable budget and live within your means.

A wise man once said: “Budgeting isn’t about limiting yourself – it’s about making the things that excite you possible.”

Contact us at swaziland@oldmutual.com 7634 0055 (WhatsApp) to book your financial education session for your company/organisation AT NO COST TO YOU; or to give us some feedback on how we can best serve you.

share story